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Down Goes Goliath!

Three Chicago lawyers take on Clear Channel Communications

Published in 2006 Illinois Super Lawyers — February 2006 by Renaldo Migaldi

Apparently the executives at Clear Channel Communications never learned what Bill Gates — and anyone who was paying attention — learned during U.S. v. Microsoft: Be careful what you e-mail, because e-mail never dies.

Instead, in internal e-mail messages from late 2001, executives of Clear Channel, which owns some 1,200 radio stations nationwide, discussed their efforts to squeeze JamSports, an independent Chicago-based sports promoter, out of the business of promoting American Motorcycle Association “supercross” dirt bike racing. These messages were laced with tough-guy posturing and occasional profanities. In one, Clear Channel Motorsports president Charlie Mancuso exhorts his people to “get with our radio stations in L.A. and Columbus and get the on-air talent to start talking about how the AMA and Jam are fucking up the sport of supercross.” In another, marketing vice president Ken Hudgens says, “We need to be scaring people — not the other way around.”

“It was the top guys in the largest entertainment empire that were using this street language,” says Jeffrey Singer, a name partner inthe Chicago law firm of Segal McCambridge Singer & Mahoney, which took on the case for JamSports against Clear Channel. “They were using the kind of language that gangsters would use. You know, ‘Let’s kill and crush and destroy them, OK? Let’s shove it up their ass.’ I mean this is the kind of stuff high school bullies say.”

Chicago-based concert promoter Jerry Mickelson had formed JamSports along with Arny Granat, his partner in Jam Productions, and four others involved in various aspects of music and race car driving promotion. Their plan was to draw on their own combined experience to promote sporting events, and in 2001 they entered into a detailed preliminary agreement and exclusive negotiations with the American Motorcycle Association’s AMA Pro Racing subsidiary to promote the AMA’s supercross races in venues across the Midwest and nationwide.

But when Mickelson set out to secure bookings, he found that stadium operators were mysteriously rejecting his offers. “I was offering cash money to the venues,” he says. “And I was being turned down with these onerous protection clauses, which I had never encountered before in my 33 or 34 years of producing events.” He also found that Clear Channel, which had just lost out to JamSports in its attempt to ink a multiyear deal with the AMA, had now developed a relationship with an international racing federation for supercross and was booking its races into the very same stadiums that were turning him down. Not only that, but concerts and other events produced by Clear Channel already dominated the calendars at these venues, accounting for as much as 70 percent of the market nationwide.

Mickelson smelled a rat. “I had a strong feeling that they had done something illegal,” he says.

At first he retained the services of Sperling & Slater, a Chicago firm known for its experience in antitrust law, which used the legal process of discovery to obtain the e-mail messages. “After I read them I was shocked — the tactics they used, and the fact that they were all in these e-mails,” he says. “So I felt we had a strong case, and I felt that a jury would be just as repulsed as I was after reading them.”

But as it became increasingly clear that Clear Channel would not settle out of court with JamSports, he realized he needed to find different legal representation. “Sperling & Slater is a great antitrust firm,” he says. “But I could not afford to pay their hourly rates, knowing that this case was gonna go to trial.”

Mickelson’s search brought him to Segal McCambridge, where Singer, Mark Crane and Paul Wojcicki all had a background in corporate trial work, dealing mainly with contract disputes and product liability. Singer has practiced law in Illinois for 30 years and speaks in the confident, measured tones of an experienced courtroom advocate. Crane, originally from Indiana, has practiced in Chicago since 1981, coaches basketball in his spare time and describes himself as a “big family guy.” Wojcicki, a native of Chicago’s South Side, has been practicing law since 1989 and says that while he has at times harbored political ambitions, “I’m having so much fun here that I’ve stayed out of politics so far.”

Crane admits that he and his colleagues hesitated before taking the JamSports case, partly because of their relative lack of experience in antitrust law; but, as Singer explains, “the No. 1 thing should always be the client. Is the client’s cause one I can identify with? Is it the kind of case I feel I have the expertise to deal with? Is it the kind of case that a jury can turn on to? There is no good trial lawyer that’ll tell you that they think they can do as effective a job for a case when they cannot identify with the parties.” In this case, he says, the e-mail messages gave him confidence. “Any jury in America — not just big city, not just Chicago — would have been offended by this stuff … This is the kind of thing that shows that even David has a chance against Goliath.”

As the lawyers from Segal McCambridge prepared to take over from Sperling & Slater, Clear Channel’s trio of attorneys from the firm of Freeman, Freeman & Salzman used various pretrial motions to try to keep the dispute from proceeding into court. “I think they felt confident that the judge was going to knock the case out of court at some point,” Crane says. “Didn’t happen.”

In fact, when the case went to trial in February 2005 before Judge Matthew Kennelly of the Seventh Circuit U.S. District Court, in downtown Chicago’s Dirksen Federal Building, it was the first time a Clear Channel competitor had ever been able to argue its complaint before a jury.

As Singer, Crane and Wojcicki scrambled to prepare for their court date, the attorneys from Sperling & Slater helped by offering the benefit of their antitrust experience.

“When we jumped in, the case was going in full motion, so we had to get up to speed quickly on the issues,” Wojcicki explains. “This was a case that involved 18 counts, and I believe 11 or 12 of them were antitrust counts. Sperling & Slater provided a source for us to say, ‘Look, here’s where we’re going with this, take a look at this, are you cool with that?’ And there was mainly a lot of reassurance we got from them: ‘You guys are exactly where you need to be in terms of the arguments you’re making and what the law is.’”

At first, Singer, the lead trial counsel who handled the opening and closing arguments before the jury, cautioned Mickelson that they would have good days and bad days in court. But as the case gathered steam day after day, he soon found things going more easily than expected. “We did not have a bad day,” he says. “We had maybe a bad afternoon here, or a morning that didn’t go as well as we wanted, but there really was not a time when we felt we were in trouble.”

Singer says that Clear Channel’s lead counsel opened with a personal attack on Mickelson. “He flat-out called my client a liar. And he was going to prove that [Mickelson] was a perjurer, that he fooled a lot of people, and [that] he was gonna try to fool the jury. He tried, during cross-examination of my client, to impeach him or show that he was providing inconsistent testimony. But the jury obviously did not feel that way. In fact, his efforts caused our client’s credibility, in the eyes of the jury, to become enhanced as opposed to diminished.”

A turning point in the proceedings came when Clear Channel executives Mancuso, Hudgens and Eric Cole took the stand. “Those three individuals are partners that I felt really revealed Clear Channel’s evil corporate culture,” says Singer. “The testimony related to their e-mails, and their efforts to try to explain those e-mails away, which in my opinion miserably failed, influenced the jury to the point that after the trial they described the Clear Channel executives as ‘scary.’ That was the word a number of them used.”

Mickelson agrees. “I’d say they came across the way their emails were written,” he says, “which was not very flattering for Clear Channel.”

“And that’s what we argued to the jury,” says Singer. “That they have a corporate culture that relied upon intimidation, upon bullying, upon threatening people [who don’t] do things the way they want.”

“They even went to stadiums where they were not planning on putting on any events [and pressured exhibitors not to deal with Mickelson and JamSports],” Crane says. “Of course they denied that they ever made any attempt to do that.”

Mickelson still has strong feelings about the corporate behemoth. “You gotta realize, I’ve never seen more lawsuits filed against a company by other business competitors, by municipalities, for throwing their weight around, for abusing the laws that are supposed to protect competition. They believe in monopolies, and that’s how they acted.”

There were still worries. Antitrust cases have always been difficult to prove, says Wojcicki, and recent trends favor laissez-faire competition. “The courts have now tried to take more of an economic approach as opposed to a legal approach. Certainly you see that in the writings of the Seventh Circuit — the antitrust statutes are consumer protection statutes, and unless you show a direct harm to consumers it’s really not an antitrust concern. And that’s different than using it to police business conduct and the operation of monopolies. If you’re a monopolist, and you’re an efficient monopolist, and that provides an economic benefit to consumers, we’re gonna leave you alone.”

Crane says the consumer protection argument was the backbone of Clear Channel’s courtroom defense — “that the only harm here from anything they did was to JamSports, and that there was no harm to consumers; that we couldn’t show directly the price of supercross tickets has gone up as a result of what they’ve done, or anything like that. And you know, ultimately we did not prevail in the antitrust count. We still feel there was an antitrust violation, without a doubt, but probably the key issue there was: does the law require that you show harm to consumers?”

Although Clear Channel successfully defended itself against the antitrust accusation, the court found it was at fault for interfering with JamSport’s agreement with the AMA. The jury awarded JamSports $90 million in damages, including $73 million in punitive damages — and Mickelson celebrated the verdict with his partners and legal team.

Mickelson says the Segal McCambridge attorneys “were, in one word, amazing. The amount of time that they put into this case — knowing every document, knowing every e-mail — was just an amazing effort by a number of people. I mean, it wasn’t just the three lawyers in the courtroom. There were plenty of people at the firm doing the work away from the courtroom, in their offices.”

In a post-trial motion, Clear Channel’s legal team persuaded the judge to vacate the jury’s judgement on one of the 3 counts that had been settled in court. This means Singer, Crane and Wojcicki must now prepare to try the case all over again, in front of a new jury.

“We’re mildly disappointed because we’d rather have closure to the case,” says Singer. “We have to put our case on again, but the jury’s not going to have to adjudicate whether Clear Channel is at fault in any way. The judge is going to instruct them that they were, and Clear Channel knows it. All the jury has to decide is how much JamSports should be awarded. Clear Channel really didn’t win much except the opportunity of having another jury whack ’em again on damages.”

“So the bad news is we have to do it all over again,” says Wojcicki. “And the good news is we could end up with an even more favorable result than the first time around.”

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